Downstream demand is sluggish, and rare earth prices have fallen back to two years ago. Despite a slight rebound in rare earth prices in recent days, several industry insiders told Cailian News Agency reporters that the current stabilization of rare earth prices lacks support and is likely to continue to decline. Overall, the industry predicts that the price range of praseodymium neodymium oxide is between 300000 yuan/ton and 450000 yuan/ton, with 400000 yuan/ton becoming a watershed.
It is expected that the price of praseodymium neodymium oxide will hover at the level of 400000 yuan/ton for a period of time and will not fall so quickly. 300000 yuan/ton may not be available until next year, "a senior industry insider who declined to be named told Cailian News Agency.
Downstream "buying up instead of buying down" makes it difficult for the rare earth market to improve in the first half of the year
Since February this year, rare earth prices have entered a downward trend, and are currently at the same price level as early 2021. Among them, the price of praseodymium neodymium oxide has fallen by nearly 40%, dysprosium oxide in medium and heavy rare earths has fallen by nearly 25%, and terbium oxide has fallen by over 41%.
Regarding the reasons for the decline in rare earth prices, Zhang Biao, a rare earth analyst at the Shanghai Steel Union Rare and Precious Metals Business Unit, analyzed the Cailian News Agency. "The domestic supply of praseodymium and neodymium is in excess of demand, and the overall downstream demand has not met expectations. Market confidence is insufficient, and various factors have led to a negative trend in praseodymium and neodymium prices. In addition, the upward and downward buying patterns have led to delayed delivery of some orders, and the overall operating rate of magnetic material enterprises has not met expectations
Zhang Biao pointed out that in Q1 2022, the domestic production of neodymium iron boron billets was 63000 tons to 66000 tons. However, this year's Q1 production was less than 60000 tons, and the production of praseodymium neodymium metal exceeded demand. The order stage in the second quarter is still not ideal, and the rare earth market is difficult to improve in the first half of the year
Yang Jiawen, a rare earth analyst at Shanghai Nonferrous Metals Network (SMM), believes that due to the impact of the rainy season in the second quarter, Southeast Asian imports of rare earth minerals will decrease, and the situation of oversupply will be alleviated. The short-term rare earth prices may continue to fluctuate in a narrow range, but the long-term prices are bearish. Downstream raw material inventory is already at a low level, and it is expected that there will be a wave of procurement market from late May to June
According to a reporter from Cailian News Agency, the current operating rate of the first tier of downstream magnetic material enterprises is about 80-90%, and there are relatively few fully produced ones; The operating rate of the second tier team is basically 60-70%, and small enterprises are around 50%. Some small workshops in Guangdong and Zhejiang regions have ceased production; Although the operating rate of waste separation enterprises has increased, due to the slow growth of downstream orders and the shortage of waste inventory, physical enterprises also purchase on demand and dare not hoard inventory.
According to the latest weekly report of the Stock Exchange, recently, due to the capacity reduction of small and medium-sized magnetic material enterprises and the instability of the oxide market price, the magnetic material factory has not shipped much waste and the turnover has decreased significantly; In terms of magnetic materials, enterprises mainly focus on procurement on demand.
According to the China Rare Earth Industry Association, as of May 16th, the average market price of praseodymium neodymium oxide was 463000 yuan/ton, a slight increase of 1.31% compared to the previous trading day. On the same day, the rare earth price index of the China Rare Earth Industry Association was 199.3, a slight increase of 1.12% compared to the previous trading day.
It is worth mentioning that on May 8-9, the price of praseodymium neodymium oxide rose slightly for two consecutive days, causing market attention. Some views believe that there are signs of stabilization in rare earth prices. In response, Zhang Biao said, "This small increase is due to the first few magnetic material bidding for metals, and the second reason is that the delivery time of the Ganzhou region's long-term cooperation is ahead of schedule, and the replenishment time is concentrated, leading to a tight spot circulation in the market and a slight increase in prices
At present, there has been no improvement in terminal orders. Many buyers purchased a large amount of rare earth raw materials when the rare earth prices rose last year, and are still in the stage of destocking. Coupled with the mentality of buying up instead of falling, the more rare earth prices fall, the less they are willing to buy. "Yang Jiawen said," According to our prediction, with downstream inventory remaining low, the demand side market will improve as early as June
At present, the company's inventory is not high, so we can consider starting to buy some, but we will definitely not buy when the price drops, and when we buy, we will definitely be on the rise, "said a purchaser from a certain magnetic material company.
The fluctuation of rare earth prices has benefited downstream magnetic material processing enterprises. Taking Jinli Permanent Magnet (300748. SZ) as an example, the company not only achieved year-on-year growth in revenue and net profit in the first quarter, but also achieved a positive reversal in cash flow generated from operating activities during the same period.
Jinli Permanent Magnet stated that one of the main reasons for the increase in operating cash flow was the significant year-on-year decrease in rare earth raw material prices in the first quarter of this year, which reduced the cash occupation of raw material procurement.
Looking ahead to the future, China Rare Earth has recently stated on the investor relations interactive platform that rare earth commodity prices have been in a fluctuating state, with more significant changes in recent times; If prices continue to decline, it will have an impact on the company's operations. Wang Xiaohui, General Manager of Shenghe Resources, stated at a performance briefing on May 11th that "recently, both supply and demand have put some pressure on rare earth prices. When the market is in a downward trend, the prices of (rare earth metals) products may be inverted, which will bring challenges to the company's operations.
Post time: May-19-2023